Problem $3-20($LO$.1,4)$

Each Saturday morning, Ted makes the rounds of the local yard sales. He has developed a keen eye for bargains, but he cannot use all of the items he thinks are "real bargains." Ted has found a way to share the benefits of his talent with others. If Ted spots something priced at $$40$ that he knows is worth $$100,$ for example, he will buy it and list it on eBay for $$70.$

Ted does not include his gain in his gross income because he reasons that he is performing a valuable service for others $($both the original sellers and the future buyers$)$ and sacrificing profit he could receive. "Besides," according to Ted, "the IRS does not know about these transactions."